Economics of harvesting woody biomass in North Carolina

NC Woody Biomass
“Nature’s renewable energy!”
http://www.ces.ncsu.edu/fore
stry/biomass.html
Extension Forestry
Campus Box 8008
NC State University
Raleigh, NC 27695-8008
Economics of Harvesting Woody
Biomass in North Carolina
Currently, North Carolina has an estimated 8.3 million green tons of
sustainably harvestable woody biomass feedstock solely from
logging residues1. Millions more may be gleaned from thinning and
fuel reduction operations. While the 17.7 million acres of timberland
in North Carolina are full of woody biomass ready for harvest the
cost of harvesting and transportation to markets make it a low value
material. This publication reviews the basic steps and cost factors
associated with woody biomass harvest, processing and
transportation. This provides the landowner with the basic
technology and general economics of biomass production in North
Carolina and forest management options are currently available.
Biomass Supply Sources – Woody biomass can be easily supplied to
facilities through sustainable forestry practices such as timber
harvesting and intermediate thinning operations. Currently, the most
common practice of woody biomass harvesting is during conventional
timber harvesting. Current harvesting levels in North Carolina generate
roughly 8.3 million tons of logging residues (or “logging slash”)
annually. Most of this logging (and hence, most of the logging residues)
occurs in the eastern half of the state (Figure 1).
Other large sources of biomass potential are in “high-graded” and fully-or
over-stocked stands that occur in the majority of the forested areas of
North Carolina. In many cases the best alternative for high-graded
stands is removal of the current timber and replanting a good species
mix. Fully- and over-stocked stands are stands that need thinning
operations to benefit the health and vitality of the forest. Many acres of
timber are in need of thinning to reduce risk of hazard and increase
productivity (see Figure 2 below).
2
Figure 2. Percent forest area that is overstocked or fully stocked by
county. These areas require thinning. Based on 2006 inventory data.
On average, 48% of NC forestland is in need of thinning.
Source: USFS, Forest Inventory and Analysis, 2009.
Also, when logging does occur, leaving large amounts of logging residues on site creates fire
hazard and site preparation problems. Without a biomass market, there is little economic
incentive to for the forest landowner to perform these important practices. This results in
lower site productivity and health of the forest. However, the recent development of
biomass-using facilities occurring throughout North Carolina is increasing demand for woody
biomass. For forest landowners this translates into thinning, site preparation, hazard
reduction, and stand replacement opportunities they didn’t have before.
Biomass Harvesting Economics – Simply put, a biomass harvester’s profit is determined by
the difference between what is paid at the mill or plant (delivered price) minus the costs paid
to the landowner for the trees (stumpage cost) plus harvesting plus transportation costs :
Profit = Delivered Price – Stumpage Cost - harvest cost -
transportation cost
Now, consider the following scenario to chip a one-truck payload of 25 green tons (20
minutes at $125.00 / hr) and deliver it biomass to a facility 50 miles away (at $4.00 / mile).
The facility pays a delivered price of $18.00 per green ton2:
Per load Per green ton
Delivered Price = $500.00 $18.00 / ton
Transporta;on costs = $200.00 $ 8.00 / ton
Harves;ng costs = $42.00 $ 1.68 / ton
Profit (per ton) = $18.00 – Stumpage Cost - $1.68 - $8.00
This leaves $8.32 / ton, not much for profit for the logger. Therefore current markets do not
allow logger to pay much (if anything) for biomass. Until profits reach proportions closer to
pulpwood (Figure 3) we are not apt to see any business solely relying biomass harvesting.
3
Figure 3. A typical economic comparison a logger faces for cost, price, and profit (in
dollars) involved with one truckload (25 tons) of differing timber harvest products. Profit,
if any, from biomass does not warrant loggers seeking out these sales alone.
Profit
Delivered Price
Cost (Stumpage,
harves;ng, and
transporta;on)
Saw;mber Pulpwood Biomass
Biomass Markets, Harvesting and Processing
Because of the economics outlined above, woody biomass is currently a low value by-product
of commercial timber harvesting. In the Southeast, standard mechanized harvesting
equipment such as feller-bunchers and grapple skidders are used to cut and haul the
commercial timber. Small, poorly formed and otherwise un-merchantable trees, tops and
branches are hauled to the landing as well and sorted. (Note: see “Combining biomass
harvesting with conventional timber harvests” at the end of this document for pros and cons.)
What happens next is determined by two possible woody biomass markets available to the
logger. Energy-producing firms that simply burn the biomass and some liquid energy plants
(such as ethanol production) will purchase “dirty” chips or “hogged” fuels (Figure 4, left).
These are chips or ground material with the leaves and bark included. Loggers selling to this
market purchase a chipper and chips vans to process and transport tops, branches, and small
trees (Figure 5).
Some chipping
machines have the
ability to remove the
lighter leaves and
smaller material to
keep nutrients on-site.
The price for
dirty chips reflects
the fact that it is the
lowest value
material from the
timber harvest.
Figure 4. “Dirty chips” or “hogged fuels” on left, “clean chips” on right.
4
Figure 5. Chipper loading a chip van at logging site.
Another form of dirty chip woody biomass processing is “masticated” (chewed-up) trees and
shrubs from land clearing operations, fuel reduction projects, and pre-commercial thinning
operations. Research is under way to develop profitable methods for harvesting, processing,
and loading
unwanted woody
vegetation (Figure
6). Higher demand
for woody biomass
can spawn new
technologies
providing
opportunities for
landowners to
perform pre-commercial
thinning
and fuel reduction
currently too
expensive.
Pellet mills and certain liquid energy plants require “clean” chips (chips with no bark or
leaves, Figure 4, above, right). These facilities directly compete with pulpmills and oriented
strand board mills (OSB) for small roundwood. Some of these facilities have their own
debarking and chipping operations to meet their feedstock specifications. For these facilities,
loggers simply delivery roundwood. Other clean chip facilities may only purchase processed
chips. To sell to these facilities, loggers add debarking and chipping equipment, increasing
the cost of their operation. As clean chip biomass facilities develop, higher demand (and price
to some extent) for
small diameter
material will justify
adding the extra
equipment. This will
lead to more loggers
processing junk trees
during traditional
harvest, increasing
thinning operations
and even clearing
high-graded timber
stands for
regeneration.
Figure 6. NC State University research using an experimental track-mounted mulcher modified to
blow mulch into trailer for later transport. This could be used for thinning operations, fuel
reduction, and other removal of unwanted woody vegetation.
5
Biomass Transport - Trucking currently is the most common method of biomass transport
in the North Carolina. If the facility accepts roundwood, then standard logging trucks may be
used. If chips are required, the facility’s receiving yard capability will determine what type of
chip van is necessary. Larger facilities have truck-tippers to empty from the van (Figure 5).
Any chip van can be emptied using these. Smaller facilities may not have tippers and can
only accept “walking floor” chip vans that self-empty. These vans are more expensive and
may be reflected in the delivery price to these facilities.
Chip vans hold up to
roughly 25 tons of
green chips and can
be loaded in 20 – 40
minutes depending on
the chipper used.
Developing markets
may lead to
centralized
stockyards of chips
near railroad lines or
ports creating the
logger more options
for selling biomass.
Combining biomass harvesting with conventional timber harvest systems
Advantages
Disadvantages
• Conventional harvesting methods provide
cost savings for subsequent silvicultural and
site preparatory activities.
• Capital cost of conventional timber harvesting
systems requires higher volume and large
tracts to remain profitable.
• Harvesting woody biomass for energy
increased the viability for generating
additional income from a landowner’s
property.
• Higher harvesting / transportation costs for
biomass means stumpage (payment to
landowner) is generally low ($0/ton - $4/ton
for dirty chips).
• Conventional timber harvesting methods
require few, if any, modifications to their
current system.
• Highly mechanized timber harvesting
equipment, where the operator is off the
ground, in a cab, and is generally safer.
Figure 5. Chip van tipper at woody biomass facility.
6
End notes:
1) Logging residues are deDined as slash, tops, limbs and other woody materials left
after conventional forest products are harvested, sorted, and removed in a logging
operation.
2) Notes on weights and prices:
a. Green ton prices are based of freshly chipped material. Dry ton prices are
roughly 2 times green ton prices as the dry weight is roughly one half the
green weight.
b. The example is based on current “dirty” green chip price averages as of
publication date. “Clean” chip facilities pay closer to pulpwood prices.
c. Demand and subsidy programs could change allow for higher delivery
prices. For example, June 2009 passage of the Biofuels Crop Assistance
Program (BCAP) essentially doubles the delivered price a registered
facility can for biomass.
Summary: Biomass….get rich quick?? - Probably, not. Currently, the slim profit
margin a logger makes from biomass requires making every load count. This means two
things for the woodland owner. First, it means that most loggers today will not go 100%
into biomass chipping. Most will continue to perform traditional logging and add a chipper
or a debarker/chipper and chip trailers to their equipment mix. In doing so, they take
advantage of the efficiency of their existing harvesting, skidding, and loading equipment,
making it pay through higher prices for sawtimber and/or pulpwood. This could change
when smaller, low-cost harvesting equipment becomes more available in the future.
Second, it means that the price for woody biomass offered by the logger will remain lower
relative to other forest products. The good news is, considering the cost savings of site
preparation and stand improvement through increased health and productivity, this is an
excellent economic opportunity for a woodland owner. In essence, biomass markets make
good forest management practices affordable. Increasing fuel costs and recent renewable
energy legislation, are opening market prospects for woody biomass. Wood pellet and
advanced biofuel facilities development will financially profit woodland owners through
better forest health, productivity. As more markets opens throughout the state, demand
increases and travel distances shorten, making this an attractive option for loggers and will
open more options for woodland owners. As with all forestry operations, when
implemented, biomass harvesting must be based on sound forest management objectives
www.ces.ncsu.edu/forestry/biomass.html
Published by North Carolina Cooperative Extension
Distributed in furtherance of the acts of Congress of May 8 and June 30, 1914. North Carolina State University and North Carolina A&T State University commit themselves
to positive action to secure equal opportunity regardless of race, color, creed, national origin, religion, sex, age, veteran status or disability. In addition, the two Universities
welcome all persons without regard to sexual orientation. North Carolina State University, North Carolina A&T State University, U.S. Department of Agriculture, and local
governments cooperating.
copies of this public document were printed at a cost of or per copy.
Prepared by
James Jeuck, NCSU Extension Forestry
Doug Duncan, NC Association of Professional Loggers, Inc.
WB-011/2009

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NC Woody Biomass
“Nature’s renewable energy!”
http://www.ces.ncsu.edu/fore
stry/biomass.html
Extension Forestry
Campus Box 8008
NC State University
Raleigh, NC 27695-8008
Economics of Harvesting Woody
Biomass in North Carolina
Currently, North Carolina has an estimated 8.3 million green tons of
sustainably harvestable woody biomass feedstock solely from
logging residues1. Millions more may be gleaned from thinning and
fuel reduction operations. While the 17.7 million acres of timberland
in North Carolina are full of woody biomass ready for harvest the
cost of harvesting and transportation to markets make it a low value
material. This publication reviews the basic steps and cost factors
associated with woody biomass harvest, processing and
transportation. This provides the landowner with the basic
technology and general economics of biomass production in North
Carolina and forest management options are currently available.
Biomass Supply Sources – Woody biomass can be easily supplied to
facilities through sustainable forestry practices such as timber
harvesting and intermediate thinning operations. Currently, the most
common practice of woody biomass harvesting is during conventional
timber harvesting. Current harvesting levels in North Carolina generate
roughly 8.3 million tons of logging residues (or “logging slash”)
annually. Most of this logging (and hence, most of the logging residues)
occurs in the eastern half of the state (Figure 1).
Other large sources of biomass potential are in “high-graded” and fully-or
over-stocked stands that occur in the majority of the forested areas of
North Carolina. In many cases the best alternative for high-graded
stands is removal of the current timber and replanting a good species
mix. Fully- and over-stocked stands are stands that need thinning
operations to benefit the health and vitality of the forest. Many acres of
timber are in need of thinning to reduce risk of hazard and increase
productivity (see Figure 2 below).
2
Figure 2. Percent forest area that is overstocked or fully stocked by
county. These areas require thinning. Based on 2006 inventory data.
On average, 48% of NC forestland is in need of thinning.
Source: USFS, Forest Inventory and Analysis, 2009.
Also, when logging does occur, leaving large amounts of logging residues on site creates fire
hazard and site preparation problems. Without a biomass market, there is little economic
incentive to for the forest landowner to perform these important practices. This results in
lower site productivity and health of the forest. However, the recent development of
biomass-using facilities occurring throughout North Carolina is increasing demand for woody
biomass. For forest landowners this translates into thinning, site preparation, hazard
reduction, and stand replacement opportunities they didn’t have before.
Biomass Harvesting Economics – Simply put, a biomass harvester’s profit is determined by
the difference between what is paid at the mill or plant (delivered price) minus the costs paid
to the landowner for the trees (stumpage cost) plus harvesting plus transportation costs :
Profit = Delivered Price – Stumpage Cost - harvest cost -
transportation cost
Now, consider the following scenario to chip a one-truck payload of 25 green tons (20
minutes at $125.00 / hr) and deliver it biomass to a facility 50 miles away (at $4.00 / mile).
The facility pays a delivered price of $18.00 per green ton2:
Per load Per green ton
Delivered Price = $500.00 $18.00 / ton
Transporta;on costs = $200.00 $ 8.00 / ton
Harves;ng costs = $42.00 $ 1.68 / ton
Profit (per ton) = $18.00 – Stumpage Cost - $1.68 - $8.00
This leaves $8.32 / ton, not much for profit for the logger. Therefore current markets do not
allow logger to pay much (if anything) for biomass. Until profits reach proportions closer to
pulpwood (Figure 3) we are not apt to see any business solely relying biomass harvesting.
3
Figure 3. A typical economic comparison a logger faces for cost, price, and profit (in
dollars) involved with one truckload (25 tons) of differing timber harvest products. Profit,
if any, from biomass does not warrant loggers seeking out these sales alone.
Profit
Delivered Price
Cost (Stumpage,
harves;ng, and
transporta;on)
Saw;mber Pulpwood Biomass
Biomass Markets, Harvesting and Processing
Because of the economics outlined above, woody biomass is currently a low value by-product
of commercial timber harvesting. In the Southeast, standard mechanized harvesting
equipment such as feller-bunchers and grapple skidders are used to cut and haul the
commercial timber. Small, poorly formed and otherwise un-merchantable trees, tops and
branches are hauled to the landing as well and sorted. (Note: see “Combining biomass
harvesting with conventional timber harvests” at the end of this document for pros and cons.)
What happens next is determined by two possible woody biomass markets available to the
logger. Energy-producing firms that simply burn the biomass and some liquid energy plants
(such as ethanol production) will purchase “dirty” chips or “hogged” fuels (Figure 4, left).
These are chips or ground material with the leaves and bark included. Loggers selling to this
market purchase a chipper and chips vans to process and transport tops, branches, and small
trees (Figure 5).
Some chipping
machines have the
ability to remove the
lighter leaves and
smaller material to
keep nutrients on-site.
The price for
dirty chips reflects
the fact that it is the
lowest value
material from the
timber harvest.
Figure 4. “Dirty chips” or “hogged fuels” on left, “clean chips” on right.
4
Figure 5. Chipper loading a chip van at logging site.
Another form of dirty chip woody biomass processing is “masticated” (chewed-up) trees and
shrubs from land clearing operations, fuel reduction projects, and pre-commercial thinning
operations. Research is under way to develop profitable methods for harvesting, processing,
and loading
unwanted woody
vegetation (Figure
6). Higher demand
for woody biomass
can spawn new
technologies
providing
opportunities for
landowners to
perform pre-commercial
thinning
and fuel reduction
currently too
expensive.
Pellet mills and certain liquid energy plants require “clean” chips (chips with no bark or
leaves, Figure 4, above, right). These facilities directly compete with pulpmills and oriented
strand board mills (OSB) for small roundwood. Some of these facilities have their own
debarking and chipping operations to meet their feedstock specifications. For these facilities,
loggers simply delivery roundwood. Other clean chip facilities may only purchase processed
chips. To sell to these facilities, loggers add debarking and chipping equipment, increasing
the cost of their operation. As clean chip biomass facilities develop, higher demand (and price
to some extent) for
small diameter
material will justify
adding the extra
equipment. This will
lead to more loggers
processing junk trees
during traditional
harvest, increasing
thinning operations
and even clearing
high-graded timber
stands for
regeneration.
Figure 6. NC State University research using an experimental track-mounted mulcher modified to
blow mulch into trailer for later transport. This could be used for thinning operations, fuel
reduction, and other removal of unwanted woody vegetation.
5
Biomass Transport - Trucking currently is the most common method of biomass transport
in the North Carolina. If the facility accepts roundwood, then standard logging trucks may be
used. If chips are required, the facility’s receiving yard capability will determine what type of
chip van is necessary. Larger facilities have truck-tippers to empty from the van (Figure 5).
Any chip van can be emptied using these. Smaller facilities may not have tippers and can
only accept “walking floor” chip vans that self-empty. These vans are more expensive and
may be reflected in the delivery price to these facilities.
Chip vans hold up to
roughly 25 tons of
green chips and can
be loaded in 20 – 40
minutes depending on
the chipper used.
Developing markets
may lead to
centralized
stockyards of chips
near railroad lines or
ports creating the
logger more options
for selling biomass.
Combining biomass harvesting with conventional timber harvest systems
Advantages
Disadvantages
• Conventional harvesting methods provide
cost savings for subsequent silvicultural and
site preparatory activities.
• Capital cost of conventional timber harvesting
systems requires higher volume and large
tracts to remain profitable.
• Harvesting woody biomass for energy
increased the viability for generating
additional income from a landowner’s
property.
• Higher harvesting / transportation costs for
biomass means stumpage (payment to
landowner) is generally low ($0/ton - $4/ton
for dirty chips).
• Conventional timber harvesting methods
require few, if any, modifications to their
current system.
• Highly mechanized timber harvesting
equipment, where the operator is off the
ground, in a cab, and is generally safer.
Figure 5. Chip van tipper at woody biomass facility.
6
End notes:
1) Logging residues are deDined as slash, tops, limbs and other woody materials left
after conventional forest products are harvested, sorted, and removed in a logging
operation.
2) Notes on weights and prices:
a. Green ton prices are based of freshly chipped material. Dry ton prices are
roughly 2 times green ton prices as the dry weight is roughly one half the
green weight.
b. The example is based on current “dirty” green chip price averages as of
publication date. “Clean” chip facilities pay closer to pulpwood prices.
c. Demand and subsidy programs could change allow for higher delivery
prices. For example, June 2009 passage of the Biofuels Crop Assistance
Program (BCAP) essentially doubles the delivered price a registered
facility can for biomass.
Summary: Biomass….get rich quick?? - Probably, not. Currently, the slim profit
margin a logger makes from biomass requires making every load count. This means two
things for the woodland owner. First, it means that most loggers today will not go 100%
into biomass chipping. Most will continue to perform traditional logging and add a chipper
or a debarker/chipper and chip trailers to their equipment mix. In doing so, they take
advantage of the efficiency of their existing harvesting, skidding, and loading equipment,
making it pay through higher prices for sawtimber and/or pulpwood. This could change
when smaller, low-cost harvesting equipment becomes more available in the future.
Second, it means that the price for woody biomass offered by the logger will remain lower
relative to other forest products. The good news is, considering the cost savings of site
preparation and stand improvement through increased health and productivity, this is an
excellent economic opportunity for a woodland owner. In essence, biomass markets make
good forest management practices affordable. Increasing fuel costs and recent renewable
energy legislation, are opening market prospects for woody biomass. Wood pellet and
advanced biofuel facilities development will financially profit woodland owners through
better forest health, productivity. As more markets opens throughout the state, demand
increases and travel distances shorten, making this an attractive option for loggers and will
open more options for woodland owners. As with all forestry operations, when
implemented, biomass harvesting must be based on sound forest management objectives
www.ces.ncsu.edu/forestry/biomass.html
Published by North Carolina Cooperative Extension
Distributed in furtherance of the acts of Congress of May 8 and June 30, 1914. North Carolina State University and North Carolina A&T State University commit themselves
to positive action to secure equal opportunity regardless of race, color, creed, national origin, religion, sex, age, veteran status or disability. In addition, the two Universities
welcome all persons without regard to sexual orientation. North Carolina State University, North Carolina A&T State University, U.S. Department of Agriculture, and local
governments cooperating.
copies of this public document were printed at a cost of or per copy.
Prepared by
James Jeuck, NCSU Extension Forestry
Doug Duncan, NC Association of Professional Loggers, Inc.
WB-011/2009